THE 4 FACTORS OF PRODUCTION

MADE BY VEER SINGHIX

Land

often described as the free gifts of nature, the factor of production Land includes natural resources such as minerals, oil, coal, the sea, the fishes in the sea, plus land itself. One of the problems of describing what is meant by land is that as soon as something is added to it, for example fertilizer to soil, it quickly becomes  someone's capital. So when describing land, it is best to stick to the free gifts of nature definition.

Labour perhaps the most important

resource in any developed country. Labour includes the skills of those who work, as well as the quantity of people who work or who are available for work. In the UK there are labour shortages, often for skilled jobs, but also for manual workers in areas where the cost of living is high. Shortages of skilled labour can push up wage rates. 

Capital this means money invested

into a business. But because the money invested does not just sit in a bank, but is turned into productive goods that are used within the business, a businesses capital can include , machinery, buildings, vans, computers etc., as well as cash.

Enterprise Is the ability to combine  the other

factors of production, and then to use them to provide profitably, goods or services. Whatever the product, whatever the service, they will all need some combination of all four factors of production to be produced. The actual mix will depend on the product or service, for example the key factor for an oil well is land, but without the other 3 factors no oil will be produced. For a bank, capital is the most important factor, and for a football team labour - but again without the other factors there is can be no Barclays Bank, no BP or Tesco and there is no Manchester United.

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